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Do la liga manage their finances better than the EPL clubs?

The club that changed football

Follow us on Twitter @UntoldArsenal

Making the Arsenal

 

Or is Deuda, Deuda in any language?

By Cameron Wolfe.

On the day when Manchester United and Liverpool have come out and admitted that they are in a group of clubs demanding that the Premier League board introduce financial controls on clubs’ spending, so that each club would be forced to break even each year or face sanctions, we take a look at what happens when such controls are not in place….

Barcelona v’s Real Madrid (A tale of two Cities)

Barcelona:

Barcelona get all the footballing plaudits on the field but looking at their figures there is a question as to whether they manage to stay within FFP.    If they fail to meet the FIFA requirements. Will they be excluded from the CL?

Or will colourful accounting kick in?

In 2011, Forbes evaluated Barcelona’s worth to be around £596million, ranking them fourth after Manchester United, Real Madrid, and Arsenal, based on figures from the 2010 season.

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Barcelona recorded revenue of £290million in the same period, ranking second to Real Madrid, who generated £380 million in revenue.

2010 figures showed that Barcelona had a net debt of £350 million, currently 58% of net worth. The club managed to record a loss of £63 million over the course of the year, despite having defended their La Liga title.

For 2011, Barcelona’s gross debt stands at around £382m. Barcelona was found to have the highest average salary per player of all professional sports teams in the world, just ahead of rivals Real Madrid.

But Barcelona’s operational costs are enormous. A player-wage bill of £185m is the highest in the world. Wages / turnover ratio is a heart-stopping 76.8%. Extra running costs push total expenditure to £301.1m

In brief just as with some clubs in the EPL, Barcelona are currently losing money year on year. Yet they persist in signing the best players and have the highest wage bill not just in their league but in the whole world.

The current squad is estimated value is £200m and doesn’t include players brought through the youth system.

The T.V. revenue in Spain is split with 49% going between Barcelona and Real Madrid. All the other teams share the rest.

When Barcelona bought Cesc the August before. It was with a lump sum of £14m and the remainder with staggered payments.

Real Madrid:

Real Madrid’s by contrast do make a healthy profit each year. Turnover, before the transfer of players increased from £350m in 2009-10 to £380 million in 2010-11.

A club statement read: “Real Madrid closes the 2010-11 fiscal year with £380m turnover. An 8.6% increase over last year. It is the largest revenue obtained by any sports institution in the world.   Debt also fell due to the increased revenue from £193m to £133million.

For the fickle Arsenal fans that persist with the theory of signing the best players regardless of cost to the club, a cautionary tale would be Real’s attempt in the 2010 CL campaign that included Cristiano Ronaldo, Kaká, Xabi Alonso, Karim Benzema and Raúl Albiol

Club President Perez announced “Real Madrid’s philosophy is to always sign the best players in the world regardless of the cost to the club.”

It ended in an ignominious exit from the Champions League, when Lyon (managed by Remi Garde) eliminated them at the last 16 stage. This meant that Madrid had not won a Champions League knock-out tie for six years, leading the local Madrid media to conclude that their “stratospheric spending” was nothing more than a colossal waste of money. Even the conservative daily ABC was moved to describe it as “more than £200m down the drain.”

UEFA’s President, Michel Platini, has condemned Madrid’s “excessive transfers as representing a serious challenge to the idea of fair play and the concept of financial balance”, leading to the assumption that Real Madrid would not be able to meet UEFA’s forthcoming Financial Fair Play (FFP) regulations that encourage football clubs to live within their means (although Real Madrid would contest this).

Madrid has been accused of colourful accounting, mostly relating to the purchase of players, and colourful banking (mostly for being a little too close to their bankers).   During the first Pérez regime, the club decided to write-off the cost of new players in the period of acquisition instead of capitalising the cost as an asset and then amortising it over the length of the player’s contract. This policy is not line with international accounting standards.

In brief. Madrid is managing to make a profit each year even with such high profile expensive additions on the playing field. The fact that the club generates such huge amounts of revenue each year allows them to indulge the fans and to get whichever player they want as the search for success.  According to their figures over the last four seasons. Madrid’s profit has been £120m

As a side note here is a list of the highest average sports stars wages.

2011 Average sports wage from around the world.

* Highest paid in that league.

Rank (last year) Ave pay per year (week)

1 (1) Barcelona * £5,260,313 (£101,160)

2 (2) Real Madrid £4,724,662 (£90,859)

3 (10) Manchester City * £4,486,580 (£86,280)

4 (6) Chelsea £4,118,227 (£79,197)

5 (4) LA Lakers * £3,804,441 (£73,162) Basketball

6 (3) New York Yankees * £3,748,831 (£72,093) Baseball

7 (14) Milan * £3,699,411 (£71,143)

8 (12) Bayern Munich * £3,579,961 (£68,845)

9 (13) Philadelphia Phillies £3,525,612 (£67,800) Baseball

10 (7) Internazionale £3,454,681 (£66,436)

For reference points here are some other clubs…

16 (22) Arsenal £3,199,678 (£61,532)

18 (20) Liverpool £3,169,631 (£60,954)

51 (110) Tottenham £2,308,494 (£44,394)

172 (163) Celtic * £1,065,304 (£20,487)

213 (-) Blackpool £435,640 (£8,378) Lowest paid

227 (229) Sporting Gijon £230,664 (£4,436) Lowest paid

277 (272) Hamilton £55,548 (£1,068) Lowest paid

Before anyone gets carried away. I know that Messi and Ronaldo are paid far more than those figures. They’re an average for the whole squad.

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13 comments to Do la liga manage their finances better than the EPL clubs?

  • chief

    The main problem is that English players are way overpriced.

  • Brickfields Gunners

    When we sold Cesc to Barkalone , they really did not need him ,but went on ahead nonetheless. He is now complaining of not getting enough playing time !Adding Song to the mix with their already high wages will surely hasten their downfall .
    Unless they know something that we don’t .
    Ditto at Real Mad-Rid – plenty of expensive players loitering about the place on high wages doing plenty nothing.
    All it needs for them to fail will be implementation of the FFP in its truest sense( a doubtful scenario) or for the pretorian guards to revolt(Cris Ronaldo is already feeling sad and melancholic, which may infect the rest of the squad).
    Great times await us as the bloodletting starts !

  • Woolwich Peripatetic

    The thing is Barca do need Cesc but they need him when Xavi quits not necessarily right now. They also need him to stop being an Arsenal player and get with the program – beyond the similar requirements of technique and game intelligence (which is why they let Arsene do their scouting for them) – the two clubs actually have very different ways of playing.

  • chris from Cambridge

    With so much politics and corruption in top football it is impossible to forecast whether The Euro Fair Play regulations will be properly enforced or not. Let’s hope they are but will Platini have the balls – especially with the possibility of big clubs breaking away to form their own league ?

  • makenzi

    Barcelona thought they would need cesc because xavi was getting old. Now they realise they dont really need him because they have Thiago and Sergi Roberto to replace him. Plus cesc is not schooled the barca way but the arsenal way and he is finding it difficult to fit in. As for song they were looking for a defender to replace puyol.

  • Woolwich Peripatetic

    Makenzi,
    Bang on, though I think you over-estimate how good Thiago and Sergi are at this point in time. Cesc is the finished example but as we both agree, an Arsenal player not a Barcelona one.

  • Woolwich Peripatetic

    Oops.

    Actually, it brings an interesting question. La Liga teams survive by selling their best players. Now if Madrid and Barca can’t afford to buy them, who will. The whole sorry mess is predicated around the TV monies being redistributed through the rest of the league by player sales. Barca have turned that tap down to a trickle, Madrid rarely buy from within Spain these days either. La Liga is turning into the megabucks SPL, with possibly the same outcome (one of the big two hitting the rocks big style).

  • Damien Luu

    I don’t care! Just lift their (Arsenal players’) f*cking wages so we can keep ’em! Look at RVP, look at Song, look at Theo, look at… err, someone else, we just couldn’t keep ’em because the old fool AW doesn’t want to give them their wanted wages! I want to keep them so others don’t call us “a selling club”, which humiliates me! Just lift their wages! I don’t care about anything else!

    /signed/ AAA member

  • Shard

    Tony,

    Any idea how many clubs need to support the proposal if and when it goes to the vote? As I recall any league rule changes need 14 of the 20 clubs to back it. Is that correct?

  • Shard

    Oops..wrong post..

  • jer

    Does anyone know why the other teams agree to that TV deal in Spain?

  • Arsenal1Again

    Way too many facts are missing from the appraisals, especially with Barcelona.

    The Spanish team has tight ties with politics and even with the Spanish elections. The team has been bankrolled via loans from the National bank under orders from the government, this is with huge outstanding debts already in place. It is absurd to put Barcelona in the equation and they should not even be mentioned in the article.

    If Barcelona need 4 players, they will have the money authorised by the Spanish President. Check out how many Presidents were elected by supporting Barcelona – here lies the link to the National Bank.

  • Mahesh

    http://en.wikipedia.org/wiki/Forbes'_list_of_the_most_valuable_football_clubs

    Barca seems to have a 34% jump this year in valuation. I guess, things are not that bleak for them after all. Or maybe I am reading too much in these rankings.